Japan Stock Futures Gain on Weaker Yen, Export Earnings Outlook

By Norie Kuboyama and Satoshi Kawano -
Oct 22, 2012

Japanese stock futures rose after
the yen weakened for an eighth day against the dollar, the
longest losing streak in seven years, boosting the earnings
outlook for exporters. Australian equities rose.

Futures on Japan’s Nikkei 225 Stock Average expiring in
December closed at 9,080 in Chicago yesterday, up from 9,020 in
Osaka, Japan. They were bid in the pre-market at 9,050 in Osaka
at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index gained
0.2 percent today. New Zealand’s NZX 50 Index slid 0.1 percent
in Wellington.

“The yen’s weakness is coming close to a level of 80 yen
per dollar, encouraging investors to buy export-related shares
such as electronics, cars and machinery,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities
Co. “The Bank of Japan is getting ready to add easing policies
at its Oct. 30 meeting amid economic condition that are clearly
deteriorating.”

The Sankei newspaper, citing an unnamed government
official, says the government has asked the Bank of Japan to
increase its asset-purchase program by 20 trillion yen ($250
billion).

The yen depreciated to as low as 79.97 against the dollar
today in Tokyo, the weakest level since July 6. Against the
euro, Japan’s currency touched to 104.47, the lowest level since
May. A weaker yen boosts the value of overseas income at
Japanese companies when repatriated.

The Bloomberg China-US 55 Index (CH55BN) of the most-traded Chinese
equities in the U.S rose 1.2 percent to 96.65 in New York
yesterday, the highest level since May 11. LDK Solar Co. led a
gain in the gauge on plans to sell new shares to state-owned
investors.

The MSCI Asia Pacific (MXAP) Index rebounded 13 percent through
yesterday from this year’s low on June 4 as stimulus measures in
Europe, the U.S., Japan and China boosted market sentiment amid
a global economic slowdown and Europe’s debt crisis. The Asian
benchmark traded at 13 times estimated earnings on average,
compared with 13.7 for the Standard & Poor’s 500 Index and 12.2
for the Stoxx Europe 600 Index.

Japan’s current earnings season peaks next week, with 570
of the 1,672 Topix companies reporting results. Nintendo Co. and
steelmaker JFE Holdings Inc. are among 126 companies scheduled
to post this week.